Good, bad or indifferent?

How do you think the majority of your clients would describe you AND how confident are you of that?

When I ask people to describe their relationship with their accountant I generally receive variations on only 3 basic answers. That is that the relationship is judged to be Good, bad or indifferent.  I would anticipate that the same is true across all professions.

What might we decide the different descriptions generally mean to ambitious professionals?

This implies that things couldn’t be better. Your clients believe that you do what they want, when they want it and for a fee that they consider to be excellent value for money. They are aware that they get pro-active advice and are very happy to recommend you to friends and family.

Your clients feel that they’re putting up with bad service, high fees and/or get little of value. They certainly wouldn’t recommend anyone they know to use you. [How often do your clients give you valuable referrals?]

This is how I would describe those clients who think their adviser is ‘okay’. This might be because you don’t wow the clients with great service nor do you charge high fees or upset the clients.

In my experience a very high proportion of people think their accountant is just ‘okay’. I think that’s sad and it’s one of the reasons that I look to help accountants provide better value to their clients.

How confident are you that your clients think that you are anything other than just ‘okay’?  The fact that they haven’t complained probably indicates that they they don’t think you’;re ‘bad’.  But equally you can’t assume that they think you’re good. Going back to the question I asked at the top of this item,  How do you think the majority of your clients would describe you AND how confident are you of that?

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Getting straight to the answer may not be best

Imagine your client collects all their receipts and asks you as their accountant to produce accounts (if required), a tax return and then to advise how much tax is payable. Alternatively the client may collate the information onto a spreadsheet or into a simple accounts package and then ask you the same question.

What approach do you take to get to the answer?

Most accountants’ go through everything and then come up with the answers. In most cases the accountant will have had to make a choice as to whether various expenses can be offset against the client’s income for tax purposes. Again, in most cases the answers will be obvious, especially after years of experience. Where there is room for doubt the accountant may make an informed guess or may just ask the client to clarify the nature of the expense and the reason they spent spent the money.

To some people that approach sounds fine. It’s certainly all too common. The accountant has used his experience, knowledge and skills to best effect and has avoided taking up much of the client’s time.
There are three problems with this approach though and they contribute to the widespread view that some accountants don’t help their clients save tax:

  1. the accountant’s informed guesses will occasionally be wrong; and
  2. the client has no way of knowing how much the tax bill has been reduced by virtue of the decisions made by the accountant.
  3. The client will assume that the accountant hasn’t tried to reduce the tax bill. If the accountant had tried then surely he/she would have told the client how much he/she had saved them.

Two step
An alternative approach would be for the accountant to reach an initial conclusion re the profits and tax and to communicate this to the client AND to make it clear that “we may be able to reduce the tax bill depending on how we treat a number of items.”

Accountants who follow this second approach can be sure their clients will see them as helping to save tax. Now the odd thing is that the final tax bill may not be any different to the tax calculated by an accountant following the first approach.

Many accountants go the automatic route because it’s faster and because their experience is such that they feel confident that they can make the right informed guesses. As this route is faster they can charge their clients less than if they ‘budget’ for a two-step approach. So at first glance this would seem to be the best approach all round.

But put yourself in the shoes of the client who wants to be confident that their accountant has saved them tax. If you go the automatic route HOW WILL THE CLIENT KNOW WHAT YOU’VE DONE FOR THEM? You must tell clients what you’ve done and how much tax you’ve saved them. It’s too easy to forget and, as a consequence, to lose (or never get) the confidence of a client that you do help them to pay less tax.

It may take a little more time in the first year to dance the two-step but the client will be happier and will be more confident you’ve done your best for them.